Wealthy and middle-class retirees are scared to touch their savings — and the whole economy is suffering as a result

More recently, a survey by Allianz Life found that 39% of retirees are reluctant to spend their savings, while 71% of working-age Americans expect to be reluctant about spending money in retirement in order to preserve their savings.

Similarly, a survey by Corebridge Financial found that only 28% of adults aged 45-79 with $100,000 or more in assets were comfortable with the idea of watching their savings shrink during their golden years. Indeed, 70% said it’s important that their nest egg doesn’t shrink in retirement.

Almost two in five retirees (38%) in the Corebridge study said they’re spending less than they want to so their nest egg doesn’t shrink. This isn’t driven by a desire to leave an inheritance for their loved ones. It’s mainly driven by fear, including the fear of outliving their savings.

That means many retirees who spent their working lives saving for their golden years aren’t actually enjoying the fruits of their labour.

How the economy is impacted

In 2022, retirees with public and private pensions generated $1.5 trillion in total economic output, supporting 7.1 million jobs nationwide, according to the 2025 Pensionomics study by the National Institute on Retirement Security.

“Pension expenditures have large multiplier effects. Each dollar paid out in pension benefits supported $2.28 in total economic output nationally,” according to the study. The largest economic impacts? Retail, food services and health care.

Then consider that “Americans hold about $20 trillion in IRAs (most of which is held by retirees) and another $15 trillion in 401(k)s and other defined contribution plans (35 to 45 percent of which is held by retirees),” Jean Chatzky, author of The Forever Paycheck: The New Retirement Strategy to Spend More, Worry Less, and Never Run Out of Money, wrote in The Atlantic.

So if pensions generated $1.5 trillion in economic output in a single year, imagine the impact of spending some of that money held in IRAs and 401(k)s.

But here’s where it gets interesting: When retirees have a guaranteed lifetime income source, such as a pension or Social Security checks — they’re more comfortable spending it. After all, you know you’re getting another one in a few weeks.

“We find that retirees spend far more from lifetime income than other categories of wealth,” according to economists David Blanchett and Michael Finke. “Approximately 80% of lifetime income is consumed, on average, versus only approximately half of other available savings and income sources.”

For single households, the withdrawal rate from savings at age 65 was just 1.9%, while the rate for married households wasn’t much higher, at just 2.1%. In both cases, that’s significantly less than the 4% rule.

“Using a relatively simple model, we estimate consumption could increase by approximately 80% for retirees if assets were converted to lifetime income streams, where the improvement rates are significantly higher for joint households,” Blanchett and Finke wrote.

How to create stable income in retirement

One way to change this is through what Chatzky calls a “forever paycheck” — converting some of their assets into a stable source of income in retirement.

“For most people, having somewhat less money but actually spending it leads to a better quality of life than having more money that they’re scared to touch,” Chatzky wrote.

For example, when comparing retirees who have annuities to those who rely on irregular drawdowns from personal savings, the ones with annuities are generally happier, according to TIAA TMRW, a retirement publication from the Teachers Insurance and Annuity Association of America.